Financial Times

Strike at LWL, good sales seen from rebuilding boom
A strike by workers demanding a raise had disrupted production at a key factory of Lanka Walltile Ltd., but the company sees good sales prospects from the rebuilding effort that is to take place following the tsunami disaster.

LWL, the only local manufacturer of ceramic wall tiles, last week reported a 66 percent increase in profit after tax to Rs 148 million in the nine months ended December 31, 2004 from Rs 89 million in the same 2003 period.

Asked about the company's future outlook, the official said: "It should be very good. There's going to be a lot of construction because of the tsunami disaster. We expect a boom in the construction industry which should keep demand high in the next 2-3 years."

Senior company officials last week held talks with striking employees at the Balangoda factory who launched a strike on February 2 demanding a Rs 7,000 wage hike.

The company management held talks with labour union leaders with the mediation of the Labour Commissioner. This has affected LWL's ability to meet orders to some extent as it is unable to transfer production from Balangoda which mainly does value added tiles and tiles of small size, both of which are labour intensive products.

Senior officials of the company said the improved profits were a result of good performances by the entire group. All companies in the group did well - the tile firms, Lanka Walltile, Lanka Walltile Meepe and Lanka Tiles as well as the Horana Plantations subsidiary.

Horana Plantations turned around on the back of good tea prices. "All three tile companies in the group did better than last year," a company official said.

In recent years the company has had to cope with competition from cheap imports from China and India as well as sharp increases in energy costs. In response, LWL lowered prices of its bigger tile sizes and penetrated well into the local market, increasing capacity utilization.

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